Obama Sidesteps Senate to Tap AIG Consultant, Terror War Critic for Top Slot

“Our country has faced many forms of devastating crime, including the scourge of the drug trade, the reign of organized crime, and countless acts of rape, child abuse, and murder. The acts of Sept. 11 were horrible, but so are these other things.”

-- Sept. 9, 2002 Legal Times article by newly appointed Deputy Attorney General James Cole.

Republicans had held up the appointment of James Cole, a longtime friend and colleague of Attorney General Eric Holder, as the second in command at the Justice Department for two reasons.

First, Cole, who served with Holder in the Clinton Justice Department, had vociferously attacked the concept of a “war on terror” and strongly argued that the Sept. 11 attacks should have been treated as law enforcement matters.

His public comments blasting the Ashcroft Justice Department’s subordinate position to the military and intelligence apparatus fueled the fires of the debate raging between the Bush administration and liberal Democrats over how to proceed.

The Bush position eventually won out, as the Obama Afghan surge clearly shows, but Republicans still cast a suspicious eye at the Holder DOJ. Holder himself has been the champion of closing the Gitmo POW camp and trying terrorists in civilian courts.

It’s not like Cole’s positions on the matter are divergent from Holder’s, he just said it without the deference usually paid to the national trauma from the attacks. Minimizing 9/11 by comparison to child molestation less than a year after the attacks was a bombshell.

The second hitch in Cole’s appointment was his role as a monitor for the famously failed American Insurance Group. Cole, a lawyer at the tony DC firm Bryan Cave, had been tapped as an “independent consultant” to AIG starting in 2005 as part of an effort to appease regulators who were worried about the practices of the firm.

Cole’s job was to monitor what was happening at the nation’s largest insurance company and report any problems or dangerous practices to the government. Whatever else Cole found, he did not find that the firm was on the brink of a total collapse that would necessitate a $180 billion bailout and lead to the nationalization of the company.

As blame was apportioned for the Panic of 2008, much fell at AIG’s feet. The company’s permissive standards for issuing policies against losses on mortgage-backed securities encouraged investment firms to take bigger and bigger risks in the arena. The catastrophic underestimation of the risks involved and the firm’s own gross undercapitalization stand out as some of the worst decisions leading up to the panic.

Cole’s law firm is said to have been paid $20 million by the company for the work.Cole has defended his consulting work at the firm and suggested that he faced a hostile relationship with his client.

Senate Republicans, though, put the kibosh on Cole’s appointment claiming that his answers to the AIG questions were not satisfactory and asked for more information about his long years of work with the bailed out firm.

President Obama, though, decided to use a recess pick to put Cole in office for the next year, finally allowing Holder to complete his team at Justice.

This is only the second most audacious recess appointment from Obama, though. His pick earlier this year of the controversial Dr. Donald Berwick to implement Obama’s national health care law was the mack daddy of recess picks.

Cole’s role as Holder’s lieutenant is less consequential. But the Cole selection is likely to raise just as much tumult. Conservatives hate his scolding over the War on Terror and good government types on both sides dislike his AIG work.

Obama Restores Syria Relations

"We have significant interests in Damascus, and being without an ambassador serves no purpose except to put us at a disadvantage. This is not a reward to the Syrian government."

-- A senior official talking to the Wall Street Journal about the decision to restore normal diplomatic relations with Syria.

In a double end-around of the Senate, President Obama Wednesday made a recess appointment of a new ambassador to Syria.

There’s nothing particularly controversial about Robert Ford, the man who got the Damascus post, it’s that there has been no ambassador to Syria since 2005, when Syrian agents were implicated in the assassination of Lebanon’s prime minister.

The Baathist regime of the Assad family has run the nation as a police state for 40 years, and often been a Middle Eastern malefactor. They were Saddam Hussein’s last allies and are now military allies of Iran.

In 2007, the Israeli Air Force destroyed what American officials said was the beginnings of Syria’s secret nuclear program. Syria is seen as the major supplier to militant groups fighting in Israel and Lebanon.

Without any discernable change in Syria’s behavior, Republicans and hawkish Democrats had strongly resisted calls from Obama and other Democrats to restore normal relations with the Assad regime.

So Obama’s decision to appoint Ford not only circumvents normal Senate vetting of appointees, but also congressional oversight on foreign policy.

Also on Thursday, the administration yanked the credentials on Hugo Chavez’s ambassador to Washington in retaliation to Chavez refusing to accept the U.S. envoy to Caracas, Larry Palmer, because of Palmer’s past criticism of the Chavez regime.

Chavez is testing out his new powers under an emergency declaration that give him all but unchecked authority in Venezuela.

House Republicans Will Push CBO on Obamacare Cost Estimates

"If [Republicans] would make the repeal of the law contingent upon the Congressional Budget Office certifying that it wouldn't increase the deficit to repeal it, maybe that is something we could compromise on."

-- Rep. Robert Andrews’ (D-NJ) on “Your World With Neil Cavuto.”

The Congressional Budget Office gave good marks to President Obama’s National Health Care law, but with a lot of conditions.

If the cuts to Medicare are actually made and if the health care exchanges work as designed and if the private insurance market doesn’t dry up then, yes, the CBO said, the plan would trim the deficit by $124 billion over the next decade.

But CBO is required to work within the world conjured by legislation, not imagine its own alternatives. If the law says half-a-trillion will be cut from Medicare, eventually, by other, braver, Congresses, then that’s what CBO scores.

But with change coming to Washington, those estimates might change.

The director of the CBO serves a four year term and is picked jointly by the speaker of the House and the president pro tempore of the Senate. But either chamber can remove a CBO director unilaterally.

Current CBO boss, Douglas Elmendorf is halfway through his term after being picked by Democrats in 2008. So while it’s highly unlikely that any permanent replacement could be selected by a divided Congress, it is very possible that House Republicans could yank Elmendorf if they don’t like what his office is serving up.

In the event of a vacancy, the agency’s deputy director, who is currently agency lifer Robert Sunshine, takes over as acting director. Sunshine filled the caretaker post when Elmendorf’s predecessor, Peter Orszag, left for the Obama administration.

Elmendorf, though, is a well-respected figure in economics circles and considered mostly a straight shooter on the Hill. His damning estimates of the cost of initial Democratic health proposals and frank testimony on the subject helped derail early efforts to pass a plan, earning him admiration from some Republicans.

While the Elmendorf CBO has argued that it would be cheaper to have a new government-run insurance program than subsidizing a cartel of private insurance companies, it has also debunked Democratic claims about cost savings on preventative medicine and the effect of the plan on employer-based insurance.

With Republicans in control of the House, they can craft proposed modifications of the Obama plan for review by the CBO in an effort to highlight problems with the plan and push for changes.Hill sources tell Power Play that one of the first tests will be an estimate of what happens if the law’s requirement that all Americans must buy private insurance or be enrolled in a government program is struck down as unconstitutional.

The death of the plan’s mandatory insurance provisions would likely make the plan unworkable, and since such an outcome seems like a real possibility, Democrats are looking for ways to preserve parts of the plan. A projection from a Democrat-appointed CBO head that the end of the mandate means disaster would go a long way toward getting moderate Democrats to the negotiating table.

All eyes will be on Elmendorf as he and his agency try to answer the questions of a divided Congress on health care.

O’Donnell Sees Conspiracy Behind Campaign Finance Probe

"Given that the king of the Delaware political establishment just so happens to be the vice president of the most liberal presidential administration in U.S. history, it is no surprise that misuse and abuse of the FBI would not be off the table."

-- Former Delaware Senate candidate Christine O’Donnell in a statement.

The word is out the Justice Department is investigating Delaware Senate candidate Christine O’Donnell for dipping into the $7.3 million in campaign contributions she received to pay her personal expenses.

O’Donnell, who has returned to the talk show circuit, says she is innocent and that Vice President Joe Biden, who formerly held the seat she sought, is behind a conspiracy to discredit her.

Perennial candidate O’Donnell gained national attention when she defeated Rep. Mike Castle, a shoo-in for a vacant Senate seat in the general election. Socially liberal Castle had angered the state’s small GOP and O’Donnell upended him with the help of the Tea Party Express and Sarah Palin.

O’Donnell’s campaign against Democrat Chris Coons turned out to be a flop, ending in a 17-point loss. She blamed national Republicans for not providing more financial support.

A former campaign manager from one of O’Donnell’s two previous Senate runs made similar allegations of misuse of campaign funds for personal expenses. O’Donnell is known to have used donations to pay half the rent on a townhouse where she lived, saying that the building was partly used as a campaign office.

O’Donnell’s held back more than $900,000 in her campaign fund at the end of her battle with Coons.

And Now, A Word From Charles

“I think Boehner will be strong and lachrymose, which is an interesting combination. I just hope he restrains himself on the floor, or that he brings a supply of Kleenex every time he introduces a bill.”